NIAGARA FALLS – The City of Niagara Falls is working to end what has become a vicious cycle of property foreclosures and speculation in its commercial district.
Instead of auctioning all tax delinquent properties to the highest bidder, the city plans to hold on to some foreclosed properties, market them, and then pick and choose who it will allow to buy the properties.
Anthony Vilardo, director of business development for the city, said the properties chosen are those that are in proximity to the downtown area – part of a strategic plan which was developed in 2011 to identify commercial properties that have the potential to revitalize downtown.
They've only chosen a few properties on Niagara Street for strategic development this past year, with their first project announced a few weeks ago at 324 Niagara St. at the former Press Box Restaurant. The number of businesses in foreclosure varies widely each year with as few as five to as many as 20. Vilardo said the number chosen to be held out of in-rem auctions each year will also vary widely, based on location, with the ultimate goal to end the blight downtown.
"We want to try to control the destiny of these properties," said Vilardo. "If you keep putting (these vacant properties) out there without an RFP, you keep falling into this vicious cycle of it being taken for back taxes."
Vilardo said if you look around you can see what the "horrific cycle of land speculation" has done to the city. He said this new method of selecting developers will safeguard the city from this type of land speculation.
On Dec. 12, the City Council, after investigating several interested developers, unanimously voted to sell the former Press Box Bar and Restaurant for $10,000. The new owners – Savarino Companies, Buffalove Development and Community Beer Works – were chosen after they agreed to invest $1.4 million in private development funds to open a craft brewing tavern that will employ nine full-time and nine part-time people.
Vilardo told the council that the former Press Box Restaurant site had gone through a series of foreclosures and auctions from 2009 to 2015, three times being foreclosed upon for back taxes. But he said it was held back from in-rem auction last November.
He said the Press Box site, an example of pre-1915 architecture, was also a "key property" in downtown Niagara Falls. The new development will return $4,888 in annual property taxes to the tax rolls, said Vilardo. He said the city projects $750,000 in sales and property taxes will be generated over a 10-year period.
He said the developers' plans for the Community Beer Works Barrel Pub and Restaurant represented the highest sales price and the highest amount of private sector development.
"If we had put this property back into the in-rem process we might have gotten pennies on the dollar," said Vilardo. "This represented the highest bidder and the best use of the property."
He said they did get another developer who wanted to invest in the property, but they offered the city no money for the building.
Renovations of the building are expected to start in spring with a summer 2017 opening.
Bernice Radle, owner of Buffalove Development and a native of Niagara Falls, told the City Council she'd like to open the pub the first week of July.
"Obviously we want to open during the height of the tourist season," said Radle. "We are moving as quick as we can and we are really dedicated to it. We're pumped."
City Council President Andrew Touma said the city's new strategy is "a fantastic approach."
"It's important to be strategic. I think it benefits the city by using this approach," he said.
He said the next step will be to go beyond foreclosed properties and take over, through eminent domain, properties that have sat vacant and unused for years on Main Street.
"This is the time. This is an approach I support and we need to be aggressive with," said Touma.
Vilardo said the city is also applying the strategy to a one-acre site at Seventh and Niagara streets, where the city owns three historic buildings (one they bought and two were taken out of foreclosure) at 610, 614 and 624 Niagara. They also demolished seven residential sites to create a development parcel. The city was awarded a $750,000 state consolidated fund grant to assist at that site. The city will act as a "pass through" agent for a developer, said Vilardo.
"The city has written and received this grant to incentivize development at that site," said Vilardo. "Right now it's set up as a mixed-use lot. The ground floors are commercial and the top floors are apartments, but it will be flexible."
By taking control of the properties, city officials can market the sites by emailing requests for proposals to about 400 developers.
Vilardo said the city will also seek proposals for developing contiguous properties at Main and Third streets, formerly owned by Dr. Pravin Mehta, which were awarded to the city as part of the settlement agreement in 2015. Mehta, who had been at the center of an illegal prescription drug distribution operation investigation, took a plea deal from federal prosecutors that required him to forfeit $125,000 and his former offices in the 500 block of Main Street. When he was sentenced in January he was also fined $500,000 and sentenced to two years in prison.